What Obama's tax offer means

President Barack Obama’s latest budget offer doesn’t resolve the fiscal cliff. But it does represent a substantial push to do away with annual fights over tax policy that have come to consume Washington each December.

The president’s proposal would permanently extend the so-called patch that saves millions of Americans from the alternative minimum tax each year. It would also extend on a permanent basis billions of dollars worth of targeted business tax breaks — most of which expired at the end of 2011 or are about to lapse at the end of the year.

The White House proposal doesn't include any provisions for offsetting these costs.

Republicans are almost certain to view the permanent extensions with skepticism. Key GOP lawmakers who are supporting revenue increases — like Oklahoma Sen. Tom Coburn — have also pressed to eliminate the AMT altogether. The Simpson-Bowles deficit-reduction proposal also killed the AMT.

And many Republicans are also fighting to trim down the extenders package, which are viewed in some conservative circles as lobbyist-driven corporate giveaways. Indeed, Coburn and four other Republicans on the Senate Finance Committee voted against an extenders package in August — negotiated by Sen. Orrin Hatch, the panel’s top GOP member — because it didn’t go far enough to trim the tax breaks.

The theory, promoted by Republicans and a healthy number of Democrats, is that items such as the AMT and extenders provisions won’t be necessary if the tax code is fundamentally rewritten in a way that broadens the tax base and lowers tax rates.

Just in luck for these lawmakers, the Obama proposal calls for a “fast-track” process to overhaul corporate and individual tax laws.

As for tax rates — the biggest source of disagreement between Obama and House Speaker John Boehner — the White House proposal extends the Bush-era tax rates for everyone making less than $400,000 a year. That’s a higher threshold than the $250,000 that Obama campaigned on starting in 2008 but less than the $1 million line that Boehner proposed on Friday.

Obama’s plan would generate $1.2 trillion in revenue, $200 billion less than the president sought last week. But it also includes $1.22 trillion in spending cuts, reflecting GOP demands for $1 in spending cuts for every $1 in revenue generated.

Republicans aren’t moving quickly to sign onto the deal. Since the White House is counting nearly $300 billion in interest savings as spending cuts, Boehner spokesman Michael Steel characterized the proposal as a $1.3 trillion tax increase paired with just $930 billion in spending cuts.

“We hope to continue discussions with the president so we can reach an agreement that is truly balanced and begins to solve our spending problem,” Steel said in a statement.

Carrie Budoff Brown contributed to this report.

This article first appeared on POLITICO Pro at 9:45 p.m. on December 17, 2012.

No. No. No. There is no room to bargain with billionaires. The "fiscal cliff" is actually the healthiest way to make a dent in the deficit. Then, in January, Obama can press for the 98%. This "bargaining" strips revenues and avoids the defense cuts that are a critical component for restoring sanity to our nation's priorities. We voted for the 250k-and-above bush tax cut lapse, and they need to pay up as a reflection of their true concern for the millions of Americans who have been living so close to the edge. Why doesn't the media note that their incomes have gone UP during the recession? Why doesn't the media note that the Bush tax cuts never did create jobs. Infrastructure investment is the surest way to prime the economy. I do not trust these closed door deals, and President Obama, do not sell us to the rich again.

Easy there, smhc . . . it *is* more complex than your response suggests. In FACT, our revenues are a smaller percentage of GDP than at any time since 1950. That means the Republicans have been trying to starve the beast all the while screaming endlessly about how government is growing out of control. B.S. In FACT, tax rates on the top 2% are at historically low points, it was 91% under Eisenhower, 74% under Nixon, then torpedoed by Reagan who ushered in the era of huge deficits. There is NO REASON to bargain with the Republicans to take away important services like Medicare (we paid into it) and Social Security (we paid into it), to save the poor rich from seeing their taxes go up 3% only on income above 250K. Good God, they are pathetic.

House Majority Leader Eric Cantor (R., Va.) seems intent on blocking Obama -- from paying the bills -- Republicans left behind … fighting Israel’s ongoing holy wars. As long as NATO will provide soldiers and the U.S. provides the money … Israel pushes this arrogant “better than thou bulls#@&!” People don’t accept this chosen crap any longer! www.HolyFaux.com

The Republican Party; has self-destructed -- on the grounds of homophobia & religious corruption! Republican party; religious extremists -- are willing to destroy the United States of America and its people -- at any cost and push the whole country over the cliff in the name of bogus hocus pocus religion!

www.BogusHocusPocus.com

Republicans ran up trillions of dollars in war costs. This global financial downturn is all attributable to the one and only; Ben Bernanke … appointed by Bush! He wanted to slow down the buoyant economy while learning on the job -- and it cost the world economy upwards of $6 Trillion.

We voted for the 250k-and-above bush tax cut lapse, and they need to pay up as a reflection of their true concern for the millions of Americans who have been living so close to the edge. Why doesn't the media note that their incomes have gone UP during the recession? Why doesn't the media note that the Bush tax cuts never did create jobs. Infrastructure investment is the surest way to prime the economy. I do not trust these closed door deals, and President Obama, do not sell us to the rich again

I'll take these one at a time...

"We voted for the 250k-and-above bush tax cut lapse"

AND 2.50 in SPENDING CUTS for EVERY DOLLAR IN REVENUE. Tell the ENTIRE STORY.

"Why doesn't the media note that the Bush tax cuts never did create jobs."

WHY not STOP LYING, the OMB disagrees with you. Who shall we believe, the OMB or you?

"Infrastructure investment is the surest way to prime the economy."

Ask JAPAN how their TWENTY YEARS of trying to prime the economy had lead to +200% debt to gdp AND an anemic gdp growth.. FACTS!

"do not sell us to the rich again"

He already has done so, in the latest offer from the Admin takes the PAYROLL TAX CUT off the table. YOUR TAXES ARE GOING UP (well more then they already are going to).